1

Referentiematrix Royal A-ware 2019

Reference matrix Royal A-ware

2019

2019

Contents

Contents ..................................................................................................... 2

1. Introduction .................................................................................... 4 1.1. Scope ............................................................................................... 4 1.2. Reading guide ..................................................................................... 5

2. CSR principles .................................................................................. 6 2.1. Accountability ..................................................................................... 6 2.2. Transparency ...................................................................................... 6 2.3. Ethical behavior .................................................................................. 7

2.4. Respect for the interests of stakeholders .................................................... 8 2.5. Respect for legal order .......................................................................... 8 2.6. Respect for international standards of conduct ............................................. 8 2.7. Respect for human rights ....................................................................... 8

3. Stakeholders ................................................................................... 9 3.1. Method for identifying stakeholders ........................................................... 9 3.2. The stakeholders of Royal A-ware: stakeholder matrix .................................... 9 3.3. Stakeholders involved in policy ............................................................... 10

3.4. Stakeholders that need to be kept satisfied ................................................ 12 3.5. Stakeholders that exercise minimal control ................................................ 13 3.6. The involvement of our key stakeholders ................................................... 13

4. CSR focus ...................................................................................... 14 4.1. Priority matrix ................................................................................... 14 4.2. Actions induced from the priority matrix .................................................... 15

5. Integrating CSR ............................................................................... 16 5.1. Sphere of influence ............................................................................. 16 5.2. Due diligence ..................................................................................... 17

6. CSR policy ..................................................................................... 19 6.1. Royal A-ware’s CSR pillars ..................................................................... 19

6.2. Sustainable Development Goals relevant for Royal A-ware ............................... 20 7. Implementing CSR ............................................................................ 22

7.1. Creating support ................................................................................. 22 7.2. Creating competences needed for social responsibility ................................... 22

7.3. Integrating CSR in company policy, processes and procedures .......................... 23

3

7.4. Communication and reporting ................................................................. 23 7.5. Monitoring and evaluating ..................................................................... 24

8. CSR progress ................................................................................... 25 8.1. Strategic Partnerships .......................................................................... 25 8.2. Environment ...................................................................................... 26

8.3. Labor conditions ................................................................................. 27 8.4. Society ............................................................................................ 28

9. Selecting CSR initiatives and tools ......................................................... 29 9.1. CSR initiatives .................................................................................... 29

9.2. ISO 26000 ......................................................................................... 29 9.3. Actions taken relating to ISO26000 ........................................................... 29

4

1. Introduction

Royal A-ware is a traditional Dutch family-owned business, specialized in supplying, producing, ripening, cutting and packaging cheese. Additionally cream, fresh dairy products and tapas are produced and packed. Our ambition is to shorten the chain, in collaboration with customers and suppliers. After all, short chains are more efficient, more sustainable, induce fresh products and secure food safety.

Royal A-ware is a company driven by consumer needs. The chain is organized based on the needs and requirements of our consumers and customers: from consumer to cow, as shown in figure 1. This approach ensures that we deliver food products that meet the needs of our consumers and clients.

Royal A-ware applies the international NEN-ISO 26000 standard, as framework for the implementation of Corporate Social Responsibility, based on seven key topics. We have chosen for the ISO-26000 standard since Royal A-ware’s CSR policy meets the integral approach. Yearly, a reference matrix is published, to report on our progress.

\

Figure 1: the value chain of Royal A-ware

1.1. Scope

Royal A-ware Food Group incorporates two companies: Royal A-ware and AB Texel Group. The organizational structure is shown in figure 2. This reference matrix focusses on Royal A-ware. The activities of these divisions include producing, ripening, cutting, packaging, cleaning and storage cheese. Also the production of fresh dairy products, cream and tapas fall within the scope. Out of scope are all the activities related to the division AB Texel Group and the Dairy Academy.

Agriculture Production Ripening Cutting & packaging

customers consumers

5

figure 2: Organizational structure Royal A-ware

1.2. Reading guide

This document answers the questions of the reference matrix, affiliated with ISO 26000. When deemed necessary, the answers are supported by other sources of information. Where possible, the answers are illustrated with practice-based examples.

6

2. CSR principles

ISO 26000 has defined seven fundamental CSR principles that a company should take into consideration when implementing CSR. These principles are accountability, transparency, ethical behavior, respect for the interest of stakeholders, respect for legal order, respect for international standard of conduct and respect for human rights. For each of these principles will be exemplified how it is incorporated it into CSR policy.

2.1. Accountability

Royal A-ware accounts for the effects on society, economy and the environment, since it is considered important to take responsibility for these effects. This is incorporated into policy in the following ways:

• Towards shareholders and the board of supervisory directors, there is accounted for the effects during meetings.

• Employees are informed through the staff magazine ‘I-ware’, and news messages on intranet, narrow casting and publication boards.

• Farmers are informed through the magazine ‘Kaasplank’, which is distributed several times a year.

• All branches are in possession of a quality system. Periodic, all locations are audited by an independent auditor. This way, we account for food safety, the process and safety in the entire value chain. Among others, we have the following quality certificates: British Retail Consortium (BRC), International Food Standards (IFS), process certificates and FSSC22000 (Food Safety System Certification). These certificates and additional processes protects our accountability for food safety.

• External stakeholders have access to information at the company website: www.royal-aware.com. Additionally, there is accounted for through direct dialogue, when requested by a stakeholder.

• At the beginning of 2020, a CSR report over 2019 will be published, in which our integration of CSR into our corporate structure will be elaborated on.

2.2. Transparency

Royal A-ware is transparent about the following decisions and activities effecting the environment:

• Product portfolio, explained on the website. • Developments within the company, which is elaborated upon when requested by

stakeholders.

7

• Developments within the company, when requested by journalists. These requests are primarily answered by the corporate communication manager. Additionally, board members and employees frequently cooperate in interviews, for example in trade magazines, or ‘het financieel dagblad’ (financial paper).

• The annual figures over 2018, which have been published in 2019. The statement can be found on the website: https://www.royal-aware.com/nl/over-royal-a-ware/nieuws/royal-a-ware-boekt-in-2018-een-stabiel-en-goed-resultaat/134

• Progress made in making the chain more sustainable, which is reported on in this reference matrix and will be reported on in the CSR report over 2019, which will be published in the beginning of 2020.

• Internally, the results of audits are communicated on intranet.

2.3. Ethical behavior

Royal A-ware behaves in an ethical manner, which is defined as ‘behaving in a manner that our products add value for each step in the value chain, with the smallest impact as possible for the environment, society and animals’. This is illustrated by the following examples:

• Royal A-ware confirms to the Dutch law and authorities and respects international standards of conduct.

• All employees of Royal A-ware have to comply with the code of conduct, which describes, among other things, how to treat colleagues and customers. Added to the code of conduct is a complaints procedure and protocol aggression in the workplace

• A code of conduct for suppliers has been established, which is part of the purchase conditions of Royal A-ware. In this document, principles regarding human rights and honest business practices are listed.

• There are two confidants appointed within Royal A-ware, whom employees can consult when coming into contact with bullying, aggression, sexual assault or discrimination.

• Royal A-ware’s dairy farmers are stimulated to take into account animal welfare, and the effects of their business on the environment and society. They are stimulated to make sustainable choices through the ‘A-ware duurzaam’ program, in which dairy farmers are rewarded with an extra premium on the milk price.

• The five different milk programs established by Royal A-ware, enhance entrepreneurship of its dairy farmers. Dairy farmers can choose in which of the programs they want to participate, thereby choosing which sustainable actions connected to the programs, are the best fit for their business.

• To produce transparent and sustainable milk for consumers of leading Dutch retailer Albert Heijn, the ‘beter voor koe, natuur en boer’ (benefitting the cows, environment and farmer) program has been developed. Within this program, Albert Heijn pays an additional fee to the dairy farmers, when taken additional sustainability measures.

2.4. Respect for the interests of stakeholders

For Royal A-ware, stakeholders are very important. Stakeholders are influenced by the activities and decisions of the organization, while at the same time Royal A-ware is influenced by its stakeholders. Therefore, the interest of stakeholders are respected and taken into consideration. To determine the importance of the different stakeholders, they are grouped in the stakeholder matrix, presented in chapter 3. In this chapter, all stakeholders stated in the matrix, will be discussed.

2.5. Respect for legal order

Royal A-ware respects laws and regulations that are in place, in the Netherlands, as well as in Europe. Additionally, the Quality, Health, Safety and Environment department researches, in collaboration with the legal department, the demands of non-European countries for our export products.

The legal Council has the final responsibility for picking up on, and implementing new laws and regulations. However, a shared responsibility lies with different departments.

2.6. Respect for international standards of conduct

Royal A-ware respects international standards of conduct, such as the OESO guidelines (organization for economic collaboration and development). The OESO guidelines for example discuss value chain responsibility, human rights, child labor, environment and corruption. The ISO-26000 framework helps us to bring the OESO guidelines into practice.

2.7. Respect for human rights

Royal A-ware respects and acknowledges the universal human rights of the United Nations. Besides conforming to laws and regulations, in which this is formalized, the following actions have been taken:

• The establishment of a code of conduct for employees, as discussed at point 2.3. • The establishment of a code of conduct for suppliers, as discussed at point 2.3.

9

3. Stakeholders

3.1. Method for identifying stakeholders

As described in paragraph 2.4., Royal A-ware respects, takes into consideration, and anticipates upon the interest of its stakeholders. In order to do so, the stakeholders need to be identified. This is done annually by using the following procedure:

• The CSR team makes an inventory of Royal A-ware’s stakeholders, based on direct dialogue with employees and their experiences, since employees of Royal A-ware are in contact with stakeholders on a regular basis.

• The stakeholders are listed and ranked according to their importance and influence. Based on this list, it is determined which stakeholders need to be taken into consideration more thoroughly.

• The selection of the list of ‘most important’ stakeholders is based upon conversations and the analysis of documents.

• The outcomes of the stakeholder analysis are used to adjust CSR policy, when deemed necessary.

3.2. The stakeholders of Royal A-ware: stakeholder matrix

The stakeholder analysis process as described in the previous paragraph, results in a stakeholder matrix, as shown in figure 3. In this matrix, the stakeholders of Royal A-ware are mapped out over two axis;

• The importance of the stakeholder for Royal A-ware. • The extent to which stakeholders can influence the policy of Royal A-ware.

Figure 3: stakeholder matrix

3.3. Stakeholders involved in policy

Our most important stakeholders are stakeholders that are significant in the extent to which they influence Royal A-ware’s policy, and are of high importance for Royal A-ware. These stakeholders are thus listed in the upper right section in the stakeholder matrix. In this paragraph, for each of the stakeholders it will be explained why they are important and how they are taken into consideration.

3.3.1. Internal stakeholders

The internal stakeholders consist of employees, the managing board, the board of supervisory directors, shareholders and AB Transport Group.

• Our 2000 employees make sure our cheese, tapas, fresh dairy and cream products are delivered to our customers. They therefore are one of our priority stakeholders. The interests of our employees are taken into account in all our decisions, and additionally are represented in the works council.

• The managing board of Royal A-ware is, on behalf of the shareholders, appointed to determine the strategy of Royal A-ware and to be in charge of operations.

• The board of supervisors ensures that Royal A-ware is responsibly governed and advises the managing board, either asked or unsolicited.

The

impo

rtan

ce o

f th

e st

akeh

olde

r fo

r Ro

yal

A- w

are

High

Keeping satisfied

5. Temporary workers 6. Labor unions 7. Media 8. Financial institutions 9. Social organizations

Involve

• Internal: • Employees • Managing board • Board of supervisors • Shareholders • AB Transport Group

• Customers • Suppliers

• Cheese • Milk (royal a-ware dairy farmers) • Raw materials tapas • Additional

• Partners • Fonterra • Albert Heijn

• Sector associations • Government

Low

Minimal control

10. Competition 11. Taks authorities 12. Key opinion leaders 13. Neighbours

Keeping informed

Limited Significant

The extent to which stakeholders can influence Royal A-ware’s policy

11

• Royal A-ware’s shareholders exercise control over the company, through voting rights, allocated to shares in the company.

• AB Transport Group, although not in the scope of this reference matrix is part of the Royal A-ware Food Group, and therefore an important stakeholder.

3.3.2. Customers

As discussed in the introduction of this document, Royal A-ware is driven by consumer needs. Our value chain is based on the needs and requirements of our clients: from consumer to cow. Customers therefore are an important stakeholder.

• The main interest of customers is to obtain a good price to quality ratio for the services and/or products they purchase. Besides the price to quality ratio, sustainability is becoming increasingly important to customers.

• Royal A-ware operates in the entire value chain, from consumer to cow. A value chain that is characterized by cross connections. Entailing that companies can be customer as well as competitor.

3.3.3. Suppliers

The knowledge and effort of our suppliers contribute to Royal A-ware’s ambition of becoming the most valuable chain partner. Therefore suppliers are important stakeholders. Royal A-ware acknowledges the following groups of suppliers:

• Dairy farmers: Since the first of January 2015, Royal A-ware collaborates with dairy farmers in the north and east of the Netherlands. The interests of dairy farmers are served by the field staff, who stay in contact with the dairy farmers. Additionally, the dairy farmers are given the opportunity to offer their opinion during information meetings and gatherings.

• Milk suppliers: part of the milk processed at the cheese production site in Heerenveen and the fresh dairy plant in Coevorden, is provided by different dairy cooperations, including NoordelandMelk, Emlichheim, Hochwald and Royal FrieslandCampina.

• Cheese suppliers: half of the cheese Royal A-ware sells is produced at the production site in Heerenveen. The other half is sourced from other cheese companies, such as ‘de Graafstroom’. Their interests are taken into account by our sourcing department.

• Suppliers of raw materials: Royal A-ware produces, packages and sells tapas for the Dutch market, as well as for the international market. Raw materials and ingredients from all over the world are used.

• Suppliers of remaining services: This group contains suppliers for materials, machines, company clothing, etc. These relations are maintained by the procurement department.

3.3.4. Strategic partners

Royal A-ware has several strategic partnerships. The partners’ interests are taken into consideration by employees and the board of directors. These partners are:

• Fonterra: the by-product whey, that is a one of the outputs of the production process at the cheese production site of Royal A-ware in Heerenveen, is processed into high quality whey product by Fonterra.

• Albert Heijn: cheese and tapas produced by the Bouter division of Royal A-ware, is distributed solely to dedicated partner Albert Heijn.

3.3.5. Sector associations

In the Netherlands, several branch organizations are active in the cheese and dairy industry. The influence of these organizations on Royal A-ware’s policy has increased over the last couple of years. Royal A-ware is active in several organization, for example the Dutch Dairy Organization (Nederlandse ZuivelOrganisatie), the Sustainable Dairy Chain (Duurzame Zuivelketen) and the branch organization for the Dutch dairy trade Gemzu. By participating in several workgroups, Royal A-ware takes into consideration the interests of the dairy industry, for the present day and for a future proof dairy industry.

3.3.6. Government

The Dutch law and regulation set by the government influences Royal A-ware’s policy and therefore is an important stakeholder. The provincial and municipal government are involved in the construction of the mozzarella and cream plant in Heerenveen. Additionally, Royal A-ware stays in contact with the Dutch water management authorities to secure, among other things, safe disposition of wastewater.

3.4. Stakeholders that need to be kept satisfied

Stakeholders that have limited influence on Royal A-ware’s policy, but are of high importance for Royal A-ware, need to be kept satisfied. The stakeholders that fall into this category, are listed in the upper left section of the stakeholder matrix. In this paragraph on how this is achieved.

3.4.1. Temporary workers

Royal A-ware makes great use of the services provided by employment agencies. In co-operation with employment agencies, temporary workers are selected. Communication with the employees mainly is coordinated by the employment agencies and the supervisors who oversee the day-to-day performance of the employees.

3.4.2. Labor Unions

Royal A-ware stays in contact with labor unions, to secure the working conditions of employees.

3.4.3. Media

As discussed in paragraph 2.2., is Royal A-ware approached by journalists regularly. When possible, their requests are granted in collaboration with the communication manager. Additionally, board members and employees frequently cooperate in interviews, for example in trade magazines.

13

3.4.4. Financial institutions

The financial department maintains contact with the financial institutions relevant for Royal A-ware.

3.4.5. Social organizations

The opinions of social organizations on dairy farming are monitored, and when needed, Royal A-ware’s policy is explained orally.

3.5. Stakeholders that exercise minimal control

Stakeholders that have limited influence on Royal A-ware’s policy and are of low importance for Royal A-ware, do have minimal control. These stakeholders, which are listed in the low left section of the stakeholder matrix, are competitors, tax authorities, key opinion leaders and neighbors. The website of Royal A-ware provides information for these stakeholders and when required, Royal A-ware is willing to strike up a conversation.

3.6. The involvement of our key stakeholders

Royal A-ware acknowledges the value of its stakeholders’ opinions and network for the development of the company. Therefore the stakeholders are involved in several ways, which have been discussed for each stakeholder group in the previous paragraphs.

14

4. CSR focus In this chapter, Royal A-ware’s CSR focus will be discussed. This focus has been determined by the establishment of a priority matrix. In this matrix, the 37 themes of ISO 26000 have been scored based on relevance and significance for Royal A-ware. The matrix is shown in figure 4.

4.1. Priority matrix

In the priority matrix of Royal A-ware, the indicators of ISO 26000 are ranked based on relevance and significance.

4.1.1. Relevant themes for Royal A-ware

Relevance, for Royal A-ware, is defined as the extent to which an indicator influences Royal A-ware’s value chain. The frequency Royal A-ware is confronted with the indicator has also been taken into account.

4.1.2. Significant themes for Royal A-ware

The significance of the indicators has been determined based on two questions:

• To what extent does the indicator influence Royal A-ware’s activities? • To what extent does the indicator has an effect on Royal A-ware’s stakeholders?

4.1.3. Priority

All 37 indicators have been scored based on relevance and significance, on a score from 1 to 3. These scores are shown in the table below. The x-axis shows the score on relevance, while the y-axis shows the score on significance. Based on these scores, priority has been determined for these indicators. The indicators in the green columns are the indicators given priority.

15

Figure 4: priority matrix

4.2. Actions induced from the priority matrix

Two actions that have been initiated based on the priority matrix and will be completed in 2020 are:

• Scoring the CSR policy by Ecovadis. Most of the indicators important for Royal A-ware, will be evaluated and scored. This will be the basis for improving these indicators.

• Conducting Energy audits (EED’s) at all locations of Royal A-ware. Based on these audits, energy reduction plans will be composed.

More actions will be determined in the annual plan of 2020.

34 Wealth and income creation 2 Gepaste zorgvuldigheid (due dilligence) 1 Decision-making processes and structure8 Economic, social and cultural rights 9 Employment and employment relationships

25 Sustainable consumption 14 Prevention of pollution17 Protection of the environment, biodiversity and restoration of 24 Protecting consumers' health and safety26 Consumer service, support, and complaint and dispute resolution29 Education and awareness30 Community involvement37 Animal Werlfare

3 Human rights risk situations 6 Discrimination and vulnerable groups 10 Conditions of work and social protection4 Avoidance of complicity 11 Social dialogue 12 Health and safety at work5 Resolving grievances 19 Responsible political involvement 13 Human development and training in the workplace

22 Respect for property rights 20 Fair competition 15 Sustainable resource use27 Consumer data protection 32 Employment creation and skills development 16 Climate change mitigation and adaptation

and privacy 35 Health 21 Promoting social responsibility in the value chain36 Social investment 23 Fair marketing, factual and unbiased information and fair

contractual practices

7 Civil and political rights 31 Education and culture

18 Anti-corruption

28 Access to essential services

33 Technology development and

access

RelevanceTo what extent does the indicator influence Royal A-ware’s activities?

Priority matrix

Sign

ific

ance

To w

hat

exte

nt d

oes

the

indi

cato

r ha

s an

eff

ect

on

Roya

l A-w

are’

s st

akeh

olde

rs?

High

Average

Low

Insignificant Average Significant

16

5. Integrating CSR In this chapter, the sphere of influence of Royal A-ware and Due-diligence will be discussed. The actions and decisions of stakeholders influence Royal A-ware’s policy. In paragraph 5.1. these stakeholders will be discussed. In the next paragraph, 5.2., it will be discussed what the effects of Royal A-ware and these stakeholders are on society, the economy and on the environment.

5.1. Sphere of influence

Royal A-ware acknowledges two groups of stakeholders within its sphere of influence. A group of stakeholders directly influencing Royal A-ware’s policy and a group of stakeholders indirectly influencing Royal A-ware’s policy.

5.1.1. Stakeholders directly influencing Royal A-ware’s CSR policy

The stakeholder group within the sphere of influence of Royal A-ware, is the supply chain, from consumer to cow, especially the stakeholders 1) strategic partners, 2) suppliers and 3) employees are important. These stakeholders directly influence Royal A-ware’s policy. Strategic partners by co-deciding on product specifications, suppliers by setting requirements for delivering products or services and employees by making day-to-day decisions.

5.1.2. Stakeholders indirectly influencing Royal A-ware’s CSR policy

Besides the group of stakeholders directly influencing Royal A-ware’s policy, there is a more extensive group of stakeholders indirectly influencing its policy. This group consists of customers, consumers, temporary workers, sector associations, labor unions, government, media, financial institutions, competitors, tax authorities, civil society, key opinion leaders and neighbors. For all of these stakeholders, how they influence Royal A-ware and how their interests are taken into consideration, has been discussed in chapter three.

5.1.3. Royal A-ware’s influence on other companies and organizations

Besides stakeholders influencing Royal A-ware’s policy on CSR, Royal A-ware stimulates other companies to take CSR into consideration. This mainly is transmitted by its employees, who stay in contact with its stakeholders on a day-to-day basis. To ensure employees can communicate up to date information, they are informed about CSR regularly. Additionally, Royal A-ware participates in network meetings and working groups of branch organizations, to share knowledge and to inspire others. Three examples:

• Dairy farmers are rewarded when they take sustainable actions, regarding the environment, transparency and animal welfare. This is secured in the sustainability program for dairy farmers ‘A-ware Duurzaam’, in which points are allocated for the

17

actions taken. Based on the score, dairy farmer can earn up to €0.05 per kilogram of milk.

• Stimulating consumers to choose for affordable, sustainable milk, while dairy farmers are rewarded when taking extra sustainability measures. This has been realized by establishing dedicated milk streams. Royal A-ware operates in 5 different milk programs like organic, meadow milk and “Boerderijmelk” which is GMO free for the European market. The ‘beter voor koe, natuur en boer’ (beneficial for the cow, environment and farmer) program for the production of private label dairy products and cheese for Albert Heijn.

• Royal A-ware participates in the Dutch Sustainable Dairy chain together with 12 other dairy companies. We share knowledge on different sustainability topics and obtain information on new legislation and standards in the dairy industry.

5.2. Due diligence

Royal A-ware evaluates the effects of its activities and decisions on society, environment and economy. The effects due to activities in the supply chain of Royal A-ware, as well as the effects caused by the activities of stakeholders in its influence sphere.

5.2.1. Evaluating the impact of Royal A-ware on its environment

The impacts of Royal A-ware on society, the environment and the economy are evaluated using the following methods:

• To monitor the quality and food and safety processes, several quality systems are in place, based on BRC, IFS and FSSCC 2000. To check the quality of these systems, they are audited on a regular basis by independent external organizations, governmental inspections (COKZ) and customer audits.

Potential negative effects determined by the analysis are as follows:

• Waste products released at production sites, such as foil, paper, plastics and residual waste, when not recycled into new products.

• End-of-life waste products, released by consumers, when not recycled. • Waste water, when not disposed in a responsible manner. • CO2 emissions from burning fossil fuels for energy, used by Royal A-ware for

producing products and for the conditioning of storage spaces. • Food waste. • Noise pollution for neighbors of production sites.

5.2.2. Evaluating the impact of stakeholders in the sphere of influence

Besides considering the influence of its own activities on the environment, Royal A-ware expects the stakeholders in its sphere of influence to take these effects into consideration as well. This is executed in the following ways:

• Sending a code of conduct to its suppliers as part of the purchase conditions.

• Stakeholder analyses, considering relevant issues in the sphere of influence, and the effect Royal A-ware can exert regarding these issues.

• Offering customers a variety of solutions, so clients can take into consideration the different effects on society, environment and economy for the different solutions.

5.2.3. Securing Due Diligence

To secure due diligence, Royal A-ware has several institutes and policies in place, including:

• A works council, chosen democratically, who serve the interests of Royal A-ware’s employees

• A board of supervisors, advising the board of directors • A code of conduct for suppliers, discussing human rights and ethical behavior. • The quality system managed by the safety, health and environment department, to

discover and tackle problems early on. • An instruction program for employees, in which the importance of (food) safety is

integrated. • Meeting the requirements set by retailers, which are secured by (not) announced

audits and certification.

19

6. CSR policy

6.1. Royal A-ware’s CSR pillars

Based on the priority matrix, Royal A-ware has chosen four focus points, translated into four pillars. These pillars are 1) Strategic Partnerships, 2) Environment, 3) labor conditions, and 4) society. These pillars are of equal importance for Royal A-ware.

6.1.1. Strategic Partnerships

The first pillar, partnerships, closely relates to Royal A-ware’s ambition of becoming a highly valued chain partner. An ambition that cannot be achieved without taking CSR into consideration. Together with partners, Royal A-ware detects and seizes CSR opportunities that exist in the value chain. Opportunities that benefit the stakeholders active in the value chain, as well as the environment, society and animal welfare.

6.1.2. Environment

With the establishment of the second pillar, environment, Royal A-ware acknowledges its responsibility to reduce its impact on the environment. Royal A-ware hereby focusses on reducing its environmental footprint per tons output, by increasing process, product and value chain optimization.

6.1.3. Labor conditions

At Royal A-ware, around 1250 people are employed. By establishing this third pillar, Royal A-ware acknowledges the importance of these employees for its success. Royal A-ware offers their employees opportunities to develop their knowledge and skills.

6.1.4. Society

Royal A-ware has production sites and offices throughout the Netherlands, and wants to be a ‘good neighbor’ to its inhabitants. Therefore, Royal A-ware supports local initiatives that connect groups of people. This ambition has been captured by the establishment of the foundation, ‘A-wareness’.

6.2. Sustainable Development Goals relevant for Royal A-ware

Royal A-ware has committed to the Sustainable Development Goals, outlined by the United Nations. Based on the priority and materiality matrix and the pillars, Royal A-ware has chosen 7 goals that fit its policy best. By committing to these goals, Royal A-ware contributes to improve the planet and the life of its citizens by 2030.

6.2.1. Goal 2: Zero Hunger

This goal focusses on investing in agriculture and increasing the capacity for agricultural productivity in a sustainable way, in order to meet the increasing demand for food. By offering dairy farmers the possibility to participate in workshops offered by the Dairy Academy, and by stimulating entrepreneurship and taking sustainable actions by offering the opportunity to supply milk for one of the five different milk programs, innovation is

stimulated by Royal A-ware. This goal is linked to the pillar ‘society’

6.2.2. Goal 7: Clean Energy

Energy is central to nearly every major challenge and opportunity the world faces today. The access to clean fuel and technology needs to increase and progress needs to be made regarding integrating renewable energy into end-use applications in buildings, transport and industry. Royal A-ware contributes to this goal by reducing its need for energy per ton

output by increasing process, product and supply chain optimization, as well as through seizing opportunities to switch to renewable energy sources. This goal is linked to the pillar ‘environment’.

6.2.3. Goal 8: Economic Growth

To acquire sustainable economic growth, societies need to create conditions that allow people to have quality jobs that stimulate the economy, while not harming the environment. Royal A-ware contributes to this goal by offering employment to around 1250 people. This goal is linked to the pillar ‘labor conditions’.

6.2.4. Goal: 9 Industry and Infrastructure

This goal focusses on technological progress and innovation in infrastructure and industry. Especially target 9.4. ‘By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities’ is

relevant for Royal A-ware. This relates to the pillar ‘environment’.

21

6.2.5. Goal 12: Responsible Consumption and production

This goal is about promoting resource and energy efficiency, sustainable infrastructure, and providing access to basic services, green and decent jobs and better quality of life for all. Focus hereby is on involving everyone in the supply chain, from producer to consumer. This fits Royal A-ware’s ‘from consumer to cow’ strategy, as well as the ‘partnerships’ pillar.

6.2.6. Goal 13: Climate Action

With rising greenhouse gas emissions, climate change is occurring at rates much faster than anticipated and its effects are clearly felt worldwide. Ambitious plans and accelerated action are needed on mitigation and adaptation. Royal A-ware contributes to this goal, by decreasing its greenhouse gasses.

6.2.7. Goal 15: Life on Land

This goal focusses on protection forests, countering desertification and increasing biodiversity. Especially target 15.5. ‘Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened species’ relates to Royal A-ware’s policy. Dairy farmers are stimulated to take actions that increase biodiversity, such as planting grasses containing

different herbs and installing hives.

22

7. Implementing CSR In the previous chapter, Royal A-ware’s CSR policy, with the four pillars and Sustainable development goals, has been discussed. This chapter describes how this policy is integrated in Royal A-ware’s business operations. This will be done by considering how support for the CSR policy (7.1) and competences needed (7.2) are created, how CSR is integrated in company policy, processes and procedures (7.3), how there is communicated about CSR (7.4) and how CSR policy is monitored and evaluated.

7.1. Creating support

Royal A-ware operates throughout the entire value chain. A CSR policy that is highly valued by its stakeholders in the value chain, is therefore important. Royal A-ware takes several measures to increase support, internally, as well as externally.

7.1.1. Internal support

As discussed in paragraph 3.3.1., Royal A-ware’s internal stakeholders are its employees, the managing board, the board of supervisors, shareholders and AB Transport Group. These stakeholders are involved in several ways. This year, an ambassadors team has been founded. In this team, employees from the different production sites and offices are united, to discuss CSR related topics. Internal stakeholders are informed about developments regarding CSR using several media, for example intranet, narrow casting and staff magazine I-ware.

7.1.2. External support

External stakeholders active in the value chain of Royal A-ware, have been described in paragraph 3.3. . In this paragraph, how they are involved in policy has also been discussed. Besides providing information about CSR, on the website or during dialogue, the A-wareness foundation is used to create support. By inspiring customers and suppliers, it is expected to increase social awareness.

7.2. Creating competences needed for social responsibility

In order to take social responsibility, one needs to know and understand how Royal A-ware defines social responsibility and what is expected of him/her. Therefore, Royal A-ware gives its internal, as well external stakeholders the chance to develop their competences.

7.2.1. Competence of internal stakeholders

Internal stakeholders of Royal A-ware are offered the following possibilities to develop their competence:

23

• All employees of Royal A-ware are offered an introduction program. In this program, new employees get to know the company, using online, as well as offline teaching methods. CSR is part of this teaching program.

• Employees are informed about new development, regarding CSR, using communication tools such as intranet, narrow casting and staff magazine ‘I-ware’.

• This year, an ambassador team has gathered, as has been discussed in paragraph 7.7.1. The team meets several times a year. As a part of these meetings, a guest speaker shares his/her experiences about CSR.

7.2.2. Competence of external stakeholders

Besides increasing the competence of internal stakeholders, Royal A-ware thinks it is important to increase the competence of external stakeholders in its value chain. Therefore, Royal A-ware participates in several network meetings and working groups, among which the Sustainable Dairy Chain (Duurzame Zuivelketen).

7.3. Integrating CSR in company policy, processes and procedures

To integrate CSR into the policy, processes and procedures of Royal A-ware, the methodology of the ‘Prestatieladder’ has been used. Although this management system is no longer audited annually, its methods are still in place. Instead of these audits, Royal A-ware reports on these methods by publishing this reference matrix.

To secure food safety, working methods and safety in the entire value chain, all production sites of Royal A-ware have a quality system. Periodically, all production sites are audited to assure these quality systems meet the requirements set.

7.4. Communication and reporting

Royal A-ware values understandable, precise, balanced and accurate CSR communication. Since Royal A-ware is in business with customers, suppliers and employees with different cultural backgrounds, cultural differences and languages are taken into account

7.4.1. Communication and reporting

Examples of CSR communication and reporting are:

• The website of Royal A-ware: https://www.royal-aware.com/en/about-royal-a-ware/csr).

• Staff magazine ‘I-ware’, in which a CSR related topic is discussed in every edition. • CSR’s annual report of 2019, which will be published in the beginning of 2020. • Presentations, for internal (Management Teams, Operational Management), as well as

external (customers, suppliers) stakeholder groups. • This document, and a self-declaration, published on ISO 26000’s publication platform. • Indirect communication, by means of the Sustainable Dairy Chain (duurzame

zuivelketen). This initiative, in which Royal A-ware participates, publishes factsheets,

short movies and other means of communication, to inform stakeholders about sustainability in the dairy chain. For more information, go to https://www.duurzamezuivelketen.nl/voorlichting

• An ambassadors team, which has started in 2019 to communicate about CSR and to start initiatives.

7.4.2. Conflicts with stakeholders

Last year, there have no legal conflicts with stakeholders.

7.5. Monitoring and evaluating

To secure the progress made on CSR, Royal A-ware monitors and evaluates its policy. How this is done, is discussed in this paragraph.

7.5.1. Monitoring Royal A-ware’s activities that affect relevant theme’s

Royal A-ware uses several methods to monitor relevant developments, such as;

• Publishing the reference matrix and self-declaration of ISO 26000. • This year, 48 interviews have been conducted with employees of Royal A-ware,

discussing the status and knowledge of CSR related themes. • Stakeholder dialogues

7.5.2. Evaluating CSR progress

The progress made, is evaluated by the CSR steering group. This group, wherein the board of directors, and several departments are represented, gathers several times a year to discuss the progress on goals and KPI’s.

7.5.3. Involving stakeholders in the monitoring and evaluation process

This year, a group of 48 employees has been involved in the monitoring and evaluation process, by conducting one-on-one interviews. During these interviews, these employees were given the opportunity to express their opinions about CSR. Besides these interviews, the ambassadors team that has been founded this year, monitors CSR progress on each business location and evaluates this progress during the meetings.

25

8. CSR progress Royal A-ware has established KPI’s for the period of 2017 to 2022. In the table below, the progress made on the KPI’s, categorized per pillar, is described.

8.1. Strategic Partnerships

KPI Status Progress 2019

Implementation of CSR, based on the guidelines of ISO 26000

l Yearly, Royal A-ware monitors, evaluates and reports about CSR, using the guidelines of ISO 26000. This year, more stakeholders have been involved in this progress, by conducting nearly 50 interviews and setting up an ambassadors team to represent all business units of Royal A-ware.

Formulating a communication plan for CSR.

l As part of the communication plan, a returning column about CSR in staff magazine I-ware has been introduced. Additionally, an ambassadors team is part of the communication plan. In the beginning of January, additional means of communication will be introduced.

100% control labels QSHE l

All labels, for all customers, are checked by the Quality department, after which they have to be accepted by the customers.

Establishing a pro-active policy for healthy products.

l Since Royal A-ware is a customer driven company, the demands of clients regarding healthy products are leading. In consultation with the clients, salt and sugar amounts have been reduced in some of the products. Additionally, Royal A-ware has launched its own brand 'FriesBlond' this year, a 100% natural product, containing no essences, colorants, or flavorings.

All business units are in possession of a Global Food Safety Initiative (GFSI) certificate.

l All business units are in procession of a type of GFSI certificate. These certificates are audited by an external organization in a yearly cycle.

Approaching clients pro-actively about the possibilities for the implementation of sustainability.

l

Royal A-ware is a customer driven company, the demands of customers regarding sustainability are leading. However, sustainability is considered in the options presented to clients. This has for example resulted in the cooperation with Dutch retailer Albert Heijn for the development of sustainable dairy products. For more information go to: https://www.ah.nl/over-ah/duurzaamheid/onzeketen/zuivelketen

Establishing a vision on sustainable dairy farming

l The sustainability vison on dairy farming resulted in our differentiated milk program strategy. In 2020 a new strategy has to be developed.

Including A-ware Duurzaam (sustainability measures for dairy farmers), in the supply conditions.

l Every year, dairy farmers receive new supply conditions for delivering milk. The 'A-ware Duurzaam', (A-ware sustainable program) is part of these conditions. Dairy farmers can earn an additional fee, when taking several sustainability measures.

Including a fee for grazing, in the supply conditions

l In the supply conditions, a fee for grazing is included each year.

Offering workshops to dairy farmers l

Royal A-ware values the education of its dairy farmers, in order to stimulate innovation. Therefore the 'dairy academy' has been established. The dairy academy offers workshops for dairy farmers, in collaboration with their partners.

Participate in the 'Duurzame zuivelketen' (Sustainable Dairy Chain)

l Since Royal A-ware values the sector's development, Royal A-ware participates in the 'Duurzame Zuivelketen'. For more information, go to : https://www.duurzamezuivelketen.nl/over-ons

8.2. Environment

KPI Status Progress 2019

Monitoring energy consumption l

This year, the energy consumption out of electricity and gas, per tons of product, of the cheese and dairy divisions of Royal A-ware have been monitored. Next year, the division Bouter will be added, as well as energy consumption out of mobility. Based on these analysis, the CO2 footprint of Royal A-ware can be calculated.

Carrying out an EED audit (European Energy Efficiency guidelines).

l This year, an EED audit has been conducted on two locations, next year again all remaining locations will be audited.

Developing an energy reduction plan

l Based on these audits and the energy consumption analysis, a reduction plan will be established.

Monitoring water consumption l

This year, water consumption, per tons of products, for the divisions cheese and dairy has been analyzed. Next year the division Bouter will be added to the analysis.

27

Monitoring waste streams and analyzing reduction and recycling options.

l This year, the different waste stream have been mapped, next year Royal A-ware will start monitoring the size of the waste streams in a new virtual environment. Additionally, recycling options have been discussed with the waste processor, resulting in the recycling of the cutting waste of a new production line.

Innovative packaging l

This year, a working group has analyzed the (new) possibilities for packages, focusing on reducing and recycling plastics. Several possibilities have been proposed and are now being tested.

Sustainability analysis logistics l

In 2018, a survey has been conducted among employees, regarding transportation. Based on this survey, several adjustments will be implemented. An adjustment that has been implemented this year, is a new lease arrangement, including the possibility for electrical cars.

Creating an awareness plan for employees

l This year, an ambassadors team has been established, including employees of the different business units of Royal A-ware. The goal of this team, is to increase CSR awareness.

8.3. Labor conditions

KPI Status Progress 2019 Accepting a code of conduct for employees.

l The code of conduct has been accepted in 2017.

Strategy employing people distanced from the labor market.

l At the moment 17 people, distanced from the labor market, are employed at Royal A-ware. To investigate the possibilities for increasing this number, 'UWV' is conducting an analysis. Based on this analysis, a strategy will be determined.

Prohibiting smoking at the company site

l Since 2018, smoking is prohibited at all sites of Royal A-ware, both inside and outside the builidings.

Developing an absence policy, resulting in an absence rate of 4.3%.

l Several measures to decrease absence have been taken, leading to a decrease of 0.2%. However, the overall absence rate is still too high.

incident registration l

All accidents are registered. Each period, an incident report is communicated internally. In these reports, a deviation is made between incidents with absence, incidents without absence, incident with damage, risk notifications and environmental incidents.

Starting an awareness campaign to increase safety

l Safety animations are screened on narrowcasting, to increase awareness among employees. Besides these animations, incident reports are shared using intranet.

Introducing the online introduction module 'safety'

l This program has been introduced.

Translating obligated e-learnings to English and Polish.

l The e-learning are available in English as well as Polish.

8.4. Society

KPI Status Progress 2019 Supporting 20 projects for each year

l This year 28 projects have been supported

Organizing an A-wareness day each year

l this year two A-wareness days have been supported. For more information, go to: https://www.stichtinga-wareness.com/

Facilitating an education program l

Royal A-ware offers schools an education program about the production of cheese. This program is used at schools weekly. For more information go to: https://www.ketenmetkaas.nl/

Preventing incovenience for neighbours

l Last years, there have been no complaints of neighbors.

29

9. Selecting CSR initiatives and tools

9.1. CSR initiatives

Since Royal A-ware does not operate remote of the rest of society, Royal A-ware participates in several initiatives, to discuss CSR with stakeholders. Based on the importance of the stakeholders, and the sphere of influence, Royal A-ware has chosen the following initiatives:

• Membership ‘MVO Nederland’ (CSR Netherlands) • ISO 26000 • Signing ‘convenant weidegang’ (grazing covenant) • Signing ‘taalakkoord’ (language agreement) • FSC quality mark for cardboard boxes • Organic cheese: SKAL (processing organic cheese) and supplying EKO cheese • ‘Duurzame Zuivelketen’ (sustainable dairy chain)

9.2. ISO 26000

Royal A-ware has chosen for ISO 26000, since it is an international standard, which can be used as a framework to build a CSR policy.

9.3. Actions taken relating to ISO26000

Royal A-ware has taken the following actions, since choosing to participate in ISO 26000:

• Establishing the priority matrix and reference matrix. • Participating in ‘MVO Nederland’ as well as the ‘Duurzame Zuivelketen’. • Composing CSR KPI’s. • Securing progress on these KPI’s.